1031 into BRRRR (what to be aware of)
I'm going to be selling 1, maybe 2, single family homes that I have some decent equity in and 1031 each. One might net me $75k to use, and the other would be around $65k. I'm looking to do my first BRRRR's as I have good property management who has access to a good contractor.
I know all the rules of a 1031 and have already found a company to do it. What are some lesser known things that I may need to watch out for or be aware of in this process?
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#1 1031 Exchanges Contributor
- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
@Kyle Winters, Not sure if we talked about this. When we talked I only took notes on one sale. But if you're selling two properties there's a gem of a hidden opportunity for a BRRR investor.
You'll be doing 2 1031 exchanges. But you can combine them into purchases allocated the proceeds any way you want. This can really boost the amount of money you get out of a refinance. And cut your mortgage costs significantly.
Instead of doing a simple purchase with financing on both, Buy one replacement for cash or minimum mortgage. and buy the other one with maximum leverage. The one with a low mortgage is the one you'll refinance after value add. Buy putting more cash into it you'll get more cash back. And the other one will have little cash so you won't need to refinance quickly and pay those mortgage costs again in a short amount of time.
Quote from @Dave Foster:Thank you for this comment. Hopefully, I can get this to work out.
@Kyle Winters, Not sure if we talked about this. When we talked I only took notes on one sale. But if you're selling two properties there's a gem of a hidden opportunity for a BRRR investor.
You'll be doing 2 1031 exchanges. But you can combine them into purchases allocated the proceeds any way you want. This can really boost the amount of money you get out of a refinance. And cut your mortgage costs significantly.
Instead of doing a simple purchase with financing on both, Buy one replacement for cash or minimum mortgage. and buy the other one with maximum leverage. The one with a low mortgage is the one you'll refinance after value add. Buy putting more cash into it you'll get more cash back. And the other one will have little cash so you won't need to refinance quickly and pay those mortgage costs again in a short amount of time.
